Crude Oil Prices Propped Up By Drop In Crude Oil Inventories

WTI Crude Oil price
WTI Crude Oil

Crude oil Inventories fell below expectations for a second week in a row, helping to pop-up crude oil prices on the Brent crude benchmark for the day. Crude oil prices spiked earlier today after the Lebanon bomb blast that triggered suspicions of terrorist involvement. A drawdown in US crude oil stocks by 7.4 million barrels exceeded the market expectations of a 3.4 million barrels per day drop. This week’s oil Inventories drawdown was not as much as that of last week but was enough to keep oil prices above the $45 mark on the day. Crude oil prices on the Brent crude benchmark currently trade at $45.75, Inching Higher by 3.72%. 

Outlook for Crude Oil Price

The initial trigger for the rise in crude oil prices on the day was the assumption that the Lebanon bomb blasts were as a result of a terrorist attack. News reports now suggest that this is more like an accidental explosion that occurred in a government depot when large amounts of ammonium compounds were stored. This could prove to be a price dampener and could lead to a stall in prices, even if an actual reversal doesn’t occur. 

The next resistance is seen at the 48.33 price level, with 50.64 lining up as a possible resistance target. Attainment of this area successfully closes the price gap of 6 March. However, further progress in crude oil prices would require a significant price catalyst, such as the recovery of demand or an event that tampers with supply. That is presently lacking, and the impact of the crude oil inventories report has been more short-term than most would have hoped for. 

A pullback targets the 44.16 support, with 41.43 also a likely candidate for bears on the Brent crude benchmark. A further dip to 38.56 or 35.61 requires risk-off triggers, one of which could be a weaker-than-expected US jobs report on Friday.

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